carpmart
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| posted on 11/8/09 at 12:55 PM |
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O/T - Best way of funding a house purchase
Hi Chaps
Need a bit of advise. In the current economic climate, I need to support my daughter and buy into a house with her. It will be a 50/50 shared
ownership scheme from the builder and of the 50% she is buying, this is being split in two and I will own 25% and she will own 25% of the property.
Simple so far!
I need to release some equity in my property as I don't have the liquidity to fund it in any other way. My key question is, if I contact my
lender and re-mortgage, do I have to declare what I am purchasing with the equity I release and does this effect their lending decisions?
So, as an example, if I was taking money for an extension on my house would this be viewed more favourably that if I was taking equity out to purchase
a Ferrari?
I know this is well off topic but there seems to be someone on here who knows something about any topic! 
Thanks in advance for your help!
You only live once - make the most of it!
Radical Clubsport, Kwaker motor
'94 MX5 MK1, 1.8
F10 M5 - 600bhp Daily Hack
Range Rover Sport - Wife's Car
Mercedes A class - Son's Car
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Flamez
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| posted on 11/8/09 at 12:59 PM |
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I think they would welcome your venture as long as affordability for the repayment is ok.
my build mac1motorsports
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carpmart
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| posted on 11/8/09 at 01:03 PM |
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quote:
Originally posted by Flamez
I think they would welcome your venture as long as affordability for the repayment is ok.
So you say I should say that the reason for the additional funds is to invest in other property?
You only live once - make the most of it!
Radical Clubsport, Kwaker motor
'94 MX5 MK1, 1.8
F10 M5 - 600bhp Daily Hack
Range Rover Sport - Wife's Car
Mercedes A class - Son's Car
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blakep82
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| posted on 11/8/09 at 01:03 PM |
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house purchase will be fine as a purpose for a further borrowing.
extra money on your motrgage is fine for any house related use (buying property, extention, redecorating, etc)
at least it was with the mortgage lender i used to work for
________________________
IVA manual link http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1081997083
don't write OT on a new thread title, you're creating the topic, everything you write is very much ON topic!
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blakep82
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| posted on 11/8/09 at 01:04 PM |
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quote:
Originally posted by carpmart
quote:
Originally posted by Flamez
I think they would welcome your venture as long as affordability for the repayment is ok.
So you say I should say that the reason for the additional funds is to invest in other property?
yes. they'll be happy with that, as long as your income stacks up with the new mortgage payments, credit checks, etc
________________________
IVA manual link http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1081997083
don't write OT on a new thread title, you're creating the topic, everything you write is very much ON topic!
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carpmart
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| posted on 11/8/09 at 01:11 PM |
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quote:
Originally posted by blakep82
quote:
Originally posted by carpmart
quote:
Originally posted by Flamez
I think they would welcome your venture as long as affordability for the repayment is ok.
So you say I should say that the reason for the additional funds is to invest in other property?
yes. they'll be happy with that, as long as your income stacks up with the new mortgage payments, credit checks, etc
Thanks Blake
OK - I'm a layman with this so I don't want to challenge you as an 'expert' but, is this true even in todays market?
Will my current lender (Nationwide BTW) make an offer conditional to the new property I'm buying. In other words, will they want to see details
of this property or will their additional lending decision be based on me (afford ability etc) and my property?
You only live once - make the most of it!
Radical Clubsport, Kwaker motor
'94 MX5 MK1, 1.8
F10 M5 - 600bhp Daily Hack
Range Rover Sport - Wife's Car
Mercedes A class - Son's Car
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smart51
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| posted on 11/8/09 at 01:28 PM |
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Your mortgage is secured on your house so they probably won't be bothered much about the one you're buying. If you don't pay,
they'll take your house in lieu of your debt not your daughter's.
[Edited on 11-8-2009 by smart51]
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blakep82
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| posted on 11/8/09 at 01:30 PM |
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i was with rbs until 4 months ago, and if you already have a motgage with them, and you wanted extra money for buying a new house, they weren't
interested in the new house itself, just as long as you weren't borrowing more than a certain % of you own current house.
in todays climate, the only restrictions rbs had were the total you could borrow against your current house. i think it was a max of 75 or 80% of the
current value of your property. the amount you can borrow is usually set by the interest rate
basically, you're borrowing the money against your house, not hers. if the money is for house purchase, they'll be happy (they'll
welcome any business you send their way) as said above, its your debt on your house. not your daughters
not sure if they might need more info on the shared ownership. rbs didn't like them for people applying for a brand new mortgage.
best way to get nationwides policy is to call them though,
but basically if its for house purchase, it won't be regulated by the consumer credit act, so you should get a decent interest rate on it, and
offer should be fairly quick.
HOWEVER...
has your daughter already started her mortgage application? you giving her a 25% deposit may raise questions about whether she has to pay it back to
you or not. they might want a deed of gift if its not to be paid back to you (solicitor will deal with that) but if she is to pay you the money back,
they'll need to take that into account for her outgoings.
i used to work in rbs mortgages, not just in the branch, so mortgages is what i did all day every day
[Edited on 11/8/09 by blakep82]
________________________
IVA manual link http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1081997083
don't write OT on a new thread title, you're creating the topic, everything you write is very much ON topic!
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200mph
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| posted on 11/8/09 at 01:42 PM |
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I used to deal with additional borrowing for HBOS - the only stipulation we had was that it had to be for a legal purpose.
Other than that, it's your money - the bank only looks to your house to security and while it may have altered lending criteria if you have the
equity they won't bother too much.
Hope this helps
Mark
Edited to include: If it's RBS or Lloyds/HBOS they'll love you, as they/we are really struggling to meet the lending criteria set by the
Government at the moment 
[Edited on 11/8/09 by 200mph]
If it isn't broke, fix it until it is
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GrumpyOne
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| posted on 11/8/09 at 01:51 PM |
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quote:
Originally posted by blakep82
HOWEVER...
has your daughter already started her mortgage application? you giving her a 25% deposit may raise questions about whether she has to pay it back to
you or not. they might want a deed of gift if its not to be paid back to you (solicitor will deal with that) but if she is to pay you the money back,
they'll need to take that into account for her outgoings.
i used to work in rbs mortgages, not just in the branch, so mortgages is what i did all day every day
[Edited on 11/8/09 by blakep82]
Don't give the 25% as a gift, anything over £3000 in any one year is classed as taxable income and she will have to pay tax on it. Give it to
her as a loan or better still keep 25% of the property, it will go up in value sooner or later.
Cheers
Colin
My wife is very understanding, she understands that if I am in the garage I am not in the house annoying her.
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Mr Whippy
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| posted on 11/8/09 at 01:53 PM |
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what happens if your daughter loses her job and can't pay her share?
can you handle her payments too?
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eznfrank
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| posted on 11/8/09 at 01:57 PM |
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Another concern is that telling them it is for a different purpose could be deemed to be a fraudulent application and could really land you in the poo
poo!!
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Irony
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| posted on 11/8/09 at 02:03 PM |
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I will be the first to admit that I don't know much about borrowing money. But what I do know is that a independant morgage financial adviser
would be able to help you know end and sort the sometimes mind boggling paperwork out for you. I have a friend of friend who did my morgage and since
then he's gone on to do at least 6 or 7 people at my work. Saved me a shed load of cash when I got mine. Can't recommend him enough - he
even comes to you to sort it out and it costs nothing as the morgage/loan company pay him a set fee.
The only problem is he's in York and your in Bedford, but if you want I can let you have his number/business number and he might help you or at
least recommend someone closer.
Email me or something if you want.
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Agriv8
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| posted on 11/8/09 at 02:16 PM |
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quote:
Originally posted by Irony
I will be the first to admit that I don't know much about borrowing money. But what I do know is that a independant morgage financial adviser
would be able to help you know end and sort the sometimes mind boggling paperwork out for you. I have a friend of friend who did my morgage and since
then he's gone on to do at least 6 or 7 people at my work. Saved me a shed load of cash when I got mine. Can't recommend him enough - he
even comes to you to sort it out and it costs nothing as the morgage/loan company pay him a set fee.
The only problem is he's in York and your in Bedford, but if you want I can let you have his number/business number and he might help you or at
least recommend someone closer.
Email me or something if you want.
Second this we payed £250 IIRC trough a recomended 'indipendant' ( collegue of the brother in law ) saved twice that ammount on 2 years
repayments.
Regards
Agriv8
Taller than your average Guy !
Management is like a tree of monkeys. - Those at the top look down and see a tree full of smiling faces. BUT Those at the bottom look up and see a
tree full of a*seholes .............
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200mph
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| posted on 11/8/09 at 02:37 PM |
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IFAs are not needed for further advances
Perhaps seeking a new mortgage or if you were looking at changing your mortgage altogether there's justification, but they can't access
any rates other than those offered by the bank for additional borrowing.
Probably worth me adding that I'm a qualified Financial Adviser (including Mortgage Advice), although thankfully no longer in that business
[Edited on 11/8/09 by 200mph]
If it isn't broke, fix it until it is
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rf900rush
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| posted on 11/8/09 at 04:13 PM |
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I Know may not relate to your purchase.
But I have seen flats for sale on shared owner system I my area, which seem some what over priced.
These offer a 30% owner part and what I thought 20-30% over priced seemed very risky.
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carpmart
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| posted on 11/8/09 at 04:37 PM |
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quote:
Originally posted by rf900rush
I Know may not relate to your purchase.
But I have seen flats for sale on shared owner system I my area, which seem some what over priced.
These offer a 30% owner part and what I thought 20-30% over priced seemed very risky.
Good observation. I too thought the house was a little overpriced but I'm currently waiting for them to accept an offer which will include
flooring and curtains and an equity split of 57% to us and 43% to them for the same price they wanted for 50%.
This I think of as a much more equitable price as it takes £32k off what they have valued it at in total. They still get their asking price for their
part of the house (bound to cover their real costs) and I get a larger equity stake. A Win Win. Its their year end at the end of Sept so I hope they
also want sales on their books.
You only live once - make the most of it!
Radical Clubsport, Kwaker motor
'94 MX5 MK1, 1.8
F10 M5 - 600bhp Daily Hack
Range Rover Sport - Wife's Car
Mercedes A class - Son's Car
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carpmart
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| posted on 11/8/09 at 04:41 PM |
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I've contacted my lender and they are happy to advance the funds based on the fact I will be using it help my daughter purchase her first
house!
The issue is, they won't advance me the new part of the mortgage on the base mortgage rate of 2.5%. They will only offer me it on a seperate
mortage at 6.0% plus! Not impressed with this!
Where can I get Bank of England base rate plus a couple of percent?
Are there any issues with having another mortgage with a different lender on the same property?
You only live once - make the most of it!
Radical Clubsport, Kwaker motor
'94 MX5 MK1, 1.8
F10 M5 - 600bhp Daily Hack
Range Rover Sport - Wife's Car
Mercedes A class - Son's Car
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200mph
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| posted on 11/8/09 at 04:49 PM |
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For the second mortgage (second charge) - while in reality any mortgage provider could do it (a) they are unlikely to do so given the limitation in
security (your first charge) and (b) it tends to be the likes of Ocean Finance that do such things, and they tend to be at higher rates anyway.
What Loan to Value % are you looking for? It might be that you are just over a trigger point, i.e. 75.5% so knocking that 0.5% off could save you a
whack of money. Unlikely, but very possible
[Edited on 11/8/09 by 200mph]
If it isn't broke, fix it until it is
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carpmart
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| posted on 11/8/09 at 05:23 PM |
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quote:
Originally posted by 200mph
For the second mortgage (second charge) - while in reality any mortgage provider could do it (a) they are unlikely to do so given the limitation in
security (your first charge) and (b) it tends to be the likes of Ocean Finance that do such things, and they tend to be at higher rates anyway.
What Loan to Value % are you looking for? It might be that you are just over a trigger point, i.e. 75.5% so knocking that 0.5% off could save you a
whack of money. Unlikely, but very possible
[Edited on 11/8/09 by 200mph]
I'm only at 54% loan to value so no issue there as I'm well into the best rate value.
So, I guess the other option is to mortgage the whole property but will I get 2.5% anywhere else? If yes, I would consider this. I'm not
looking at any redemption penalties so that helps!
Anyone seen a good rate in the market at the moment?
Thanks!
You only live once - make the most of it!
Radical Clubsport, Kwaker motor
'94 MX5 MK1, 1.8
F10 M5 - 600bhp Daily Hack
Range Rover Sport - Wife's Car
Mercedes A class - Son's Car
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owelly
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| posted on 11/8/09 at 08:20 PM |
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Just to wang my tuppence worth although it may not be relavent to you....
If the builder/developer owns half (or whatever %) of the property, will your daughter ever own the house? Say in 5 years time when she wants to buy
the rest of the property, she'll be buying the other share at the current value of the property. My chum bought half and rented half of a
property. He paid £30k for his half and rented the other. A few years down the line when he wanted to buy the rest of the house, he had to find over
£145k due to the rise in property prices!!
And what happens if the builder is 'on fire' and needs to grab capital? He could sell his half to anyone he wants. Or he could offer it to
you if you have the cash.....
Just a few thoughts..
http://www.ppcmag.co.uk
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Ivan
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| posted on 11/8/09 at 08:42 PM |
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I'm with Mr W - only do it if you can afford to take over the full payment for both your daughter's and your share plus all other costs
such as rates, taxes, power and water etc if something goes wrong in her life as you cannot afford to lose your share of the investment, and you will
not want to see your daughter lose her home.
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wilkingj
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| posted on 12/8/09 at 10:49 AM |
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Make sure you do a legal agreement between you and your daughter concenring the property and who owns what, and who pays what where and when. ie what
happens if she is unemployed, sick, refuses to pay etc etc.
These types of purchases are fine until the unexpected happens and then it can cause arguments and split families etc.
This was the advice I was given by my solicitor 25 years ago when I took a mortgage to extend my house with the girl who I then later married. ie we
were not married, and therefore she did not have a legal interest in the property that she was borrowing money againt (joint mortgage).
ie she was not married to me at the time of taking the mortgage. You are not married to your daughter, so have no legal interest in the property, you
need to address this.
ie what happens if (heaven Forbid) she dies etc.
So make sure you tie it all up legally before you enter into the agreement with the building society.
Its added expense, but will protect you both (probably from each other) in the event of it all turning to poo.
You may not see the need to do this now, but you would be glad you did in the event of it all going wrong.
Make sure you declare the truth about any loans ie their purpose. You shouldnt have any problem if its all kosher!
Its all I can say.
1. The point of a journey is not to arrive.
2. Never take life seriously. Nobody gets out alive anyway.
Best Regards
Geoff
http://www.v8viento.co.uk
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blakep82
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| posted on 12/8/09 at 01:28 PM |
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^ wot he says, but the conveyancing solicitor working on your daughters mortgage should sort all that out anyway.
________________________
IVA manual link http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1081997083
don't write OT on a new thread title, you're creating the topic, everything you write is very much ON topic!
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carpmart
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| posted on 12/8/09 at 03:04 PM |
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Thanks for all the advice chaps!
You only live once - make the most of it!
Radical Clubsport, Kwaker motor
'94 MX5 MK1, 1.8
F10 M5 - 600bhp Daily Hack
Range Rover Sport - Wife's Car
Mercedes A class - Son's Car
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